The Culture Project presents this special program, "The Wall Street-Washington Connection," that explores how America's recent financial problems have been caused by the interaction between the federal government and Wall Street. This is part of the Culture Project's “Blueprint for Accountability,” a series that asks “How can we empower ourselves to hold our leaders–in government, education and corporate institutions–accountable for the events of the past and the conditions of the future?”"

Karen Finney

Karen Finney is the host of Disrupt with Karen Finney, which airs weekends from 4 -5 p.m. ET on MSNBC.

Van Jones

Van Jones, new co-host of CNN's re-launch of Crossfire and president of Rebuild the Dream, has been named one of our nation’s most constructive policy leaders. He is an environmental advocate, civil rights activist, and attorney.

Jesse LaGreca

Jesse LaGreca is a blogger and writer for Daily Kos and a prominent Occupy Wall Street activist.

Heather McGhee

Heather C. McGhee is the Director of the Washington office of Demos, a New York-based public policy center. Demos blends research, advocacy and communications in the pursuit of three overarching goals: a more equitable economy with opportunity for all; a more robust democracy in which all Americans are empowered to participate, and strong public sector that can provide for our common interests and shared needs.

As Director, Heather develops and executes strategy for increasing the organization's impact on federal policy debates on issues of democracy reform, economic opportunity and financial regulation, trade and globalization. She is also a frequent commentator in print, radio and television news. In 2010, she became a contributor to Countdown with Keith Olbermann on Current TV. She is also a frequent guest on MSNBC, Fox News, and CNN. Her opinions, writing and research have appeared in numerous outlets, including the Wall Street Journal, USA Today, National Public Radio, the Washington Post, and the New York Times. She is the co-author of a chapter on retirement insecurity in the book Inequality Matters: The Growing Economic Divide in America and its Poisonous Consequences (New Press, 2005).

In 2009, she co-chaired a task force within Americans for Financial Reform that helped shape key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In 2008, she served as the Deputy Policy Director in charge of Domestic and Economic Policy with the John Edwards for President campaign, helping craft that campaign's agenda-setting policies to end poverty, halt global climate change, reform financial services, and other far-reaching aims.

She holds a B.A. in American Studies from Yale University and a J.D. from the University of California at Berkeley School of Law.

Eliot Spitzer

Eliot Laurence Spitzer is an American lawyer, politician and the former Governor of New York. Spitzer was elected governor in the November 2006 election.

He is the former New York State Attorney General, a member of the Democratic Party, and is married to Silda Wall Spitzer, the founder and chair of Children for Children, a non-profit organization.

Ron Suskind

Pulitzer Prize-winning journalist and author Ron Suskind has written some of America's most important works of nonfiction, framing national debates while exploring the complexities of human experience.

Mr. Suskind's latest book, "Confidence Men" (September, 2011), is a multi-layered narrative about the fall of the U.S. economy, the rise of Barack Obama, and the President's harrowing battle to take control of his White House and earn the confidence of the American people.

His previous works include the New York Times bestseller, "The Way of the World"(August, 2008), about the forces fighting the global "hearts and minds" struggle at a time when awesomely destructive weapons are available to the common man; "The One Percent Doctrine" (June, 2006), a signature work on how the U.S. government frantically improvised to fight a new kind of war after 9/11; "The Price of Loyalty, George W. Bush, the White House and the Education of Paul O'Neill"(Jan 2004), a sweeping tour of the inner workings of the American government in the modern era; and "A Hope in the Unseen, An American Odyssey from the Inner City to the Ivy League" (Doubleday/Broadway, 1998) a critically-acclaimed bestseller that has redefined national debates on race, class and achievement.

In addition to his books, he often appears on network television and has been a contributor for The New York Times Magazine and Esquire. Mr. Suskind was the Wall Street Journal's senior national affairs reporter from 1993 until his departure in 2000, and won the 1995 Pulitzer Prize for Feature Writing. He currently lives in Washington, DC with his wife, Cornelia Kennedy Suskind, and is a distinguished visiting scholar at Dartmouth College.

Matt Taibbi

Matthew C. "Matt" Taibbi is an American author and journalist reporting on politics, media, finance, and sports for Rolling Stone and Men's Journal, often in a polemical style. He has also edited and written for The eXile, the New York Press, and The Beast.

Van Jones, acclaimed author and President of Rebuild the Dream, and Eliot Spitzer, former Governor of New York, discuss the actors who triggered the 2008 financial collapse and the ramifications of the regulatory failure on middle class America.

CF:Good evening. And welcome come to Blueprint for Accountability: The Wall St.-Washington Connection. I'm Carolyn Forch, Professor and Director at Lannan Centerfor Poetics and Social Practice here at Georgetown University. And we're verypleased to bring the Culture Project to our university for the first time. Tonight'sevent is the first in the Lannan Centers annual Spring Symposium confronting ourpresent economic crisis and the role of financial and corporate powers in thepolitical life of our republic. In the words of Thomas Jefferson: I believe thatbanking institutions are more dangerous to our liberties than standing armies. Theissuing power should be taken from the banks and restored to the people to whom itproperly belongs." Many have worked to bring you what we hope will be a veryexciting, multimedia, high-powered event of great moment. We would like to thank theCulture Project's Artistic Director, Allan Buchman; and executive producers AndyKarsch and Jody Evans; and also, very especially, Nan Richardson and the CultureProject's Director of Production, Jayashri Wyatt and Caitlin Tyler-Richards of theLannan Center for their tireless work. We thank our stellar cast of participants andguests and the crew of young people who have connected guest and hall tonight, tothe rest of the world. We will be live streaming through Fora.tv and on the RollingStone website. Dylan Ratigan, who was to be tonight's moderator, is not here with usdue to illness but his colleague from MSNBC, Karen Finney, has graciously offered tostand in for him at the last possible moment. Finally I would like to thank the manydonors who have made this evening possible. Including support from the ArcaFoundation, Panta Rhea, Cynthia Ryan and the Schooner Foundation, Veatch Foundation,Stewart R. Mott Foundation, and very personally for Georgetown, Patrick Lannan whois with us this evening, and Lannan Foundation of Sante Fe, New Mexico for generoussupport of Lannan Center. I will ask you to please turn off or silence your cellphones. The next voice you hear will be that of Karen Finney. End: 00.02.29Start: 00.03.19 KF: I just want to kind of go over how this is going to go tonight:We are going to start each of the four sections of this conversation with a filmclip, that will kind of set the tone for the conversation; we will come out of thatfilm clip and have a conversation with our distinguished panelists, who I'm about tointroduce in just a minute; and then each section will end with a dramatic reading,and then we will move on to the next section. So, without further ado let meintroduce our panel: I have Eliot Spitzer. He prosecuted Wall St. executives asAttorney General for the state of New York and later served as New Yorks governor.Hes now a regular columnist for Slate magazine reporting on Americas economicsituation. Thank you for joining us, Eliot. To my immediate right, Matt Taibbi, as acontributing editor to Rolling Stone magazine, our next guest has been one of themost entertaining and ferocious critics of Wall Street that is pretty good. BigBanks and Corporate Greed. From his best-selling books to his blog, he continues toshine a light on some of the most excessive injustices of our time. Matthew. To myfar left Ron Suskind. He won the Pulitzer Prize in 1995 for feature writing for aseries of articles composed while acting as the Senior National Affairs Writer forthe Wall Street Journal. In his latest book, Confidence Men: Wall Street,Washington, and the Education of a President, he chronicles the White House responseto, quote, a cascade of crises from insolvent banks to collapsing carmakers. RonSuskind. Okay, let us make sure I get this right. Van Jones, who needs nointroduction I am kidding, best known for his environmental work with Green for Allas President Obamas special advisor for Green Jobs. Van founded the organizationRebuild the Dream, which aims to restore economic opportunity for American families.He also has a book coming out by the same name, Rebuild the Dream is there a copyof that you want to show? coming out next week. You know, we have got no problemdoing shameless plugs up here. Van is also a New York Times bestselling authors andone of Times 100 Most Influential People. Heather McGee, having acted as DeputyPolicy Director for John Edwards Presidential campaign, our next guest has battledto influence public debate and catalyst change. Now the director of the Washingtonoffice of Demos which strives to utilize ideas and action to promote the commongood. And last, but not least, Jesse LaGreca. He has been referred to as thesmartest man on Wall Street. Giving voice to the Occupy Wall Street movement, he isa daily coast blogger, he is a protester and activist who has attacked incomeinequality and fought for Wall Street accountability. Jesse LaGreca. We're going tostart with our first film clip and it's called Crash. End: 00.6.38.Start: 00.6.39 [Crash] End: 00.12.00Start: 00.12.01 KF: All right. I love One of the things I love about watching thatis I read a story from March 2008 just to remind myself how we got here, and at thatpoint president Bush was saying, It was all going to be fine by the summer, He justdid not say which summer, of course, so we are still waiting. So, I want to startwith this idea, taking up this idea in the film I mean, personally, I do not buythis idea that nobody knew that this was coming, right? It feels like we weresitting on a time bomb the whole time. Eliot? End: 00.12.30Start: 00.12.31 (ES): Yeah, absolutely, I think that only those who lived within theintellectual construct of Alan Greenspan and Hank Paulson and perhaps the DemocraticSenators who shared that world view, bought the notion that the system that theycreated could continue forever. Anybody who read history, could understand finance,who looked at the housing market, who looked at the junk that Wall Street was doingunderstood this game was going to end. Now, the hedge fund guys who understood thatbet against it, made a fortune, the regulators who had the guts to stand up and pushback basically got pushed out of the way because the consensus in Washington - thisderegulatory market-based faith that had been ingrained since the days of presidentReagan - had taken hold in such a fervent, powerful way, that nothing would get inthe way of the Alan Greenspans, the Larry Summers, the Tim Geithners, those who hadbuilt the very system that was inevitably going to collapse. So it was clear tosmart people some made money on it, some tried to stand up and protest but thosewho dominated Wall Street refused to see what was obvious. End: 00.13.35KF: Heather, you want to weigh in on that?Start: 00.13.38 HM: Yeah, I mean, you really have to remember how much, when thederegulatory idea was being soldthe principles that we would all benefit fromeverybody, from the least-sophisticated checking account holder to, you know, themulti-bank conglomerate was going to benefit by getting the strong hand of thegovernment out of the way. And that is how it was sold. I think that it's importantfor us to remember that, so we that have a sort of a smell test for the same kind oflanguage that's being used today. Because it really was sold and bought veryeffectively by people from both sides of the aisle. End: 00.14.11.Start: 0.14.12 ES: Can I just jump in? Because you are so correct, I mean, the twowords that should immediately make your ears perk up: self regulation. Remember whateverybody said, I mean everybody said, Don't worry about excess in the market; theywon't sell bad stuff, they wont misrepresent. We the investment bankers, they said,will prevent ourselves from doing it because we believe in both the ethics and theintegrity of the market. It would be in our long-runit would not be in our interestto do that. Of course, we now see what the history is. Those words whichunfortunately came back into play last week but that's a separate conversationperhaps those are the words that should immediately lead you to recognize that it'sall a faade, a Potemkin village which can endanger us. End: 00.14.48KF: The just trust me argument.ES: Thats right.KF: Ron, did you want to weigh in?Start: 00.14.53 RS: Yeah, you know it is interesting. Sometimes there is just areporter you just get lucky. And in this last book, I just had a moment of lovelygood fortune. I was just walking through Union station here in our town, with GaryGensler. I don't know if you know Gary, he's the former Goldman guy who runs theCommodity Futures Trading Commission. He has kind of done a little bit of a mini JoeKennedy; He knows all the rules of Wall Street, he used to help run Goldman Sachs.Now he's turned on them. And Gary is walking through Union Station, a few blocksfrom here, and walking the other way is the guy who ran structured products,mortgage products, the CDOs [Collateralized Debt Obligations], the CDS-ers [CreditDefault Swaps], for Goldman Sachs, 2003-2007. They see each other. I am there with apad and a tape recorder. They start talking. Gensler knows just what to ask. And itgets right on this issue: of who knew what when. Because the framing of this storythat Matt has talked about, and Jessie, and others: Oh, we got hit, too, on WallStreet. We were surprised like the rest of you. Its false! It. Is. False. And righthere you see the evidence. So Gensler says to this guy, Voigtman: Alright, you ranstructured products. What did you know and when did you know it? What he says isextraordinary. He says, In late 2003 we started to see garbage coming into GoldmanSachs. Subprime mortgages, stuff that even Goldman wouldn't buy - now that's a highstandard. Goldmans going, What, are you kidding? Then were sending it back. We'renot taking it. Then its being bought at par essentially at selling price. Genslergoes, Okay. What did you do then? Did you change your underwriting standards? ..i.e., did you recognize this? And Voigtman says, Oh, no, no, we doubled desks on thestreets, i.e., We went hog-wild. And then what does Goldman do? Goldman then startstalking to AIG [American International Group], to say We need this credit insurance,credit default swaps. They were sleepy, uh, sort of confections, that were builtmostly in the 1980s for sleepy corporate bonds. You get a teeny break on the priceof the bond cost. If it goes under, if General Motors goes under, God forbid, thatyou get paid. Well let's use this for arguably the most disastrous products evercreated by Wall Street. And the credit defaults stops stop getting pushed, pushedhard. Goldman and AIG across the street. So now you get the key moment, and Genslersays to Voigtman standing there, Alright, so when does Goldman make a directionalbet on essentially subprime mortgages? Now, Goldman, in public, has said, Oh, wevedone this In late 2007, Gary Cohn, the number 2 guy at Goldman says, Thats when werealized it. What does Voigtman say? He says a guy whos left Goldman, mind you. Hesnow at the Royal Bank of Canada. Perfect, hes out from under the Goldman dome ofsilence he says, Well, as a matter of fact, we were more short than long, i.e. adirectional bet against the entire mortgage planet in 2004. Early 04. What does thatmean? There were some long positions, and Goldman, when the whole thing blew up,said, Look, we have some of these long positions, but they were way more short thanlong.And even at the end, when theyre saying, Oh, we have to be more short, theywanted to dump all the long positions, even the few that were out there mostly as amisdirection for counter-parties, for people in deals with them. Now this isactionable evidence. That guys like Elliot well, if there are any prosecutors leftin America guys like Elliot turn into prosecution. But the idea that they didntknow is false. The bottom-line framing is that they knew it would be an explosion.They bought insurance on the whole blast radius. But the blat radius was much biggerthan they expected. Plain and simple. End: 00.18.49Start: 00.18.50 KF: So, picking up on that, cause I feel like I read this in yourImean, Matt, you chronicled this beautifully. Clearly, the warning signs were there.People were ignoring those warning signs, people didnt, you know, were in greatdenial; they didnt want to see it, right? End: 00.19.05Start: 00.19.07 MT: Well, right, or else they did see it and they chose to profitfrom it rather than sound the general alarm and I know Elliot has talked about thisbefore, that the whole rationale behind self-regulation was, Well, the market willtake care of this problem. If anything really bad ever comes up, we can handle it.Well get on the phone, well call the regulators, well deal with this in-house. Butwhat we saw with the financial crisis was that exactly the opposite happened, thatwhenyou know there certainly were some banks that were blind-sighted, maybe not bythe whole possibility of a collapse but by the timing of it.KF: Like who?MT: Well, some of the dumber banks, you know, Bear Stearns, you know, LehmanBrothersKF: I mean, might as well name names, you knowMT: Some of these guys got caught warehousing some of the more dangerous structuredproducts and they got blind-sighted, especially by the timing of it. But some ofthem didnt, I mean, clearly Goldman Sachs we know that they had meetings in late2007 where they were discussing whether or not they were too short or too long, theyhad bet too much on these mortgage products and they actually talked openly abouthow we have to get rid of this stuff as quickly as possible. Lloyd Blankfein said,quote-unquote Look, we have to get rid of these cats and dogs because theyreweighing down our balance sheet. So instead of sounding the alarm, they went out andtried to find somebody to unload this stuff on, they called it in-house theycalled these axes. They had these sales axes where they gave incentives tosalespeople to dump their crap on unsuspecting clients who they made fun of, theycalled them Muppets and Pink Elephants and Unicorns and, you know, they made allthese, uh, these derogatory names for their clients. So that was what they did, whenthey had this knowledge, they used it for their own personal gain rather than forthe general good. End: 00.20.52Start: 00.20.53 RS: Now, Matt, we should mention, were doing a little reporting donhere. Ill give you Voigtmans number.MT: Sure, absolutely. Maybe they knew even earlier than that.RS: Well, clearly they did, and whats interesting, at the end of 2007, they weredumping the remaining, fairly modest long positions that they still had. They weremostly short at that point. End: 00.21.11Start: 00.21.11 ES: There is a regulatory analogue to what youre seeing in thebanks, which is, when I was AG back in 99, we made our first sub-prime case. And webegan to open up a series of investigations. And the banks, which literally ownedthe OCC - it was their fees that pay for the OCC went to the OCC, the Office of theControl of the Currency, and had the OCC go to court to shut down our investigationsof the national banks and their practices and sub-prime debt. So we said, This isgoing to metastasize. And the banks went to court and succeeded all the way up tothe Supreme Court and by the time we went to the Supreme Court it was 2008, too lateto actually do the investigation, they affirmatively went into the court room. Andif you had been to the courtroom you would have seen the lawyer for the OCC sittingnear the table, but in the first row were all the lawyers for the banks telling himexactly what to say, it was like a puppet and a puppeteer, one of the mostoutrageous things Ive ever seen. It was horrendous. End: 00.22.02Start: 00.22.03 KF: But Heather, to your point, though, this started a long timeago. I mean, this was thirty years, forty years in the making. There were problemsjust sitting there. End: 00.22.13Start: 00.22.14 HM: I think that the other set of people who knew other thanGoldman , other than the AG, were actually people in the housing and economicjustice community who were running around in the 1990s and saying Look at what ishappening in Cleveland. Look at what is happening in these working-classneighborhoods where it is suddenly no longer in the banks interest to sell amortgage product that is affordable for the borrower. That is what shifted, when youbroke that line of accountability. So a broker could come up to knock on the door ofan elderly woman who has had a house for generations and say, Youve got a leak inyour roof. Would you like another loan to be able to pay for that? Im going to addthis refine loan on top of your existing equity. And they the broker got paid akickback for the spread between what that elderly woman qualified for and what theywere able to sell her. Then the broker sells that same loan to a bank that then nolonger has to keep that loan in its books for thirty years because of the miracle ofsecuritization, and can quickly sell that loan off to the street, and so we have noaccountability except for that elderly woman whos sitting in there with a house witha roof that may be patched up, but negative equity immediately and a ticking timebomb. And the housing advocates knew, and I always say: if we had just gone short onthe housing market instead of trying to go to Congress and trying to get the Feds toregulate, we would be you know, wed be endowed for generations. End: 00.23.43Start: 00.23.44 KF: That is a good place for us to pause. We are now going to hear areading from the actor Anna Kahja . She is going to read the Dixie Mitchell Story,it was adapted from TV interviews and articles. End: 00.23.56Start: 00.24.10 AK: My name is Dixie Mitchell and Ive lived in my house since 1967.Ive raised 50 foster kids and 8 of my own babies in my house. I paid off my mortgageyears ago, back in the 80s. We were always getting calls out of the blue abouttaking a loan out on the house. One day we got a call it was right around the timethat one of my foster kids needed help, and we had a lot of repairs to do on thehouse. So we took advantage of the call, and we took out a loan. In the beginningeverything was fine and we were able to make the payments. But then my husband had astroke and lost his job. He got cancer, and is now paralyzed in a wheel chair, andIm still recovering from cancer too. Right around the same time, the housing marketwent to pieces and our loan payments went through the roof. Our only income issocial security, and we just couldnt pay the loan when the interest rate went up. Weasked for a modification the minute that we got into default. I was just sodevastated by them not giving us the modification. They said we didnt qualify, butthen who [does] qualify? We went into bankruptcy to save our house from being soldon the steps of the courthouse in Seattle. Isnt it twisted that we had to declarebankruptcy in order to save our home! We didnt have anywhere else to go. They wantedto auction off our home! Those big banks, they dont care about us itty bitty people.They dont care that the money that they were bailed out with [is ours], and nowtheyre using it against us, and kicking us out of our homes. Theyre literallythrowing us in the street we have nowhere else to go. I needed them to look me inthe eye and tell me why they think its better to put people out in the street. Theyhavent done their share to help. They dont even give you a chance . . . all they dois lose your paperwork and make you send it over and over again. Each time you talkto somebody, you get a different answer. I dont even know how this happened. We gotthis loan from one bank, and they gave it to someone else, and gave it to someoneelse, and gave it to someone else. We couldnt even figure out who the heck we weredealing with. We finally traced it to a bank in Florida! But no matter how manytimes I tried to save this home, they just kept denying us the modification! Istarted reaching out to my community and neighbors for help to collect petitionsignatures. Washington CAN! And The New Bottom Line both helped me. The banks werentgoing to help, so we had to do it ourselves. We organized an action one day at myhome here in Seattle and then there were Community leaders down in Florida thatdelivered my modification paperwork and the petitions to Ocwen (oak-when) Financialand they asked Ocwen Financial to call me. We were all rallied at my house waitingfor that call. They told us they got our signatures and our paperwork, but wouldntpromise anything. They said they would call in a few days. So we waited. And wevebeen waiting! We need to know if we got the fixed interest rate or the loanmodification that will be within a range we can afford You know, millions offamilies across the country are going through this just like us. We wont stopfighting. Not until were able to make the big banks pay their fair share. End:00.29.49Start: 00.29.53 [Film clip: Homegrown Tragedy] End: 00.34.49Start: 00.34.53 KF: That was called "Homegrown Tragedy", appropriately. Matt, I'mgoing to start with you. Because what I take out of that is yet again, hearing thatregulation: bad, just trust us: good. Except people lost their homes. So. What wasgoing on? End: 00.35.10Start: 00.35.11 MT: Well, one of the things that happens in, regulationthere are alot of things that happen with regulation. First of all, some of thesome of thepertinent companies were allowed to choose their own regulators. A great example isAIG [American International Group], which in the late nineties they brought asavings-and-loan in the state of Delaware which allowed them to designate themselvesa thrift, or a savings-and-loan. Because of that decision, they were allowed to beregulated, they were allowed to choose their own regulators. So they were regulatedby the Office of Thrift Supervision, which is the smallest and weakest of all thefinancial regulators. The OTS had exactly one insurance expert on its staff, and AIGwas a company with a hundred and eighty thousand people on it and it was beingregulated by this tiny regulator with one insurance expert. And that's a really goodreason why, they didn't notice this gigantic half trillion dollar bet thatuncollaterized bet that AIG was making on mortgages leading up to mid crisis. Sothat's one thing, another thing, is that - just to tell a story that mightillustrate this issue, a couple of months ago I was talking to somebody who workedfor one of the ratings agencies and his job at the ratings agency was to rate,mortgage-backed CDOs so essentially he was a math whiz who was in charge of comingup with the mathematical rationale with calling a subprime mortgages of very poorquality a triple-A instrument. So this was a very clever individual, he was a mathwhiz, he went to Harvard, a very, very smart guy. So that was part of his job andanother part of his job was meeting periodically with government regulators. And theway he described it to me is typically this is an intellectual mismatch. The bestand the brightest, it's sad to say, do NOT tend to go to work for the FDIC [FederalDeposit Insurance Corporation], the OCC, the OTS, even the Fed, and typically whatthese meetings were would be 25, 26 year old, 27 year old kid who would come intothe office of these rating agencies they would come back brief meeting, they wouldsort of, wave a magic wand, explain the rationale for rating all these CDOs, andthey would get away without asking too many questions. But one time, he said, he gota guy in who was clever who kept asking the right questions, and he made thisemployee of the ratings agency very nervous. After he left that day, this guy wentto his boss and said this wasn't the usual idiot, this guy actually understands whatwe do here. He says, Really what's his name? And a month and a half later this guyworked for that company. And typically this is what happens. The money, money talks.The, the - and this is the last thing I'll say - the real problem with the revolvingdoor in regulation in Wall Street is that the best regulators know that if they dotheir jobs well theres an enormously profitable job waiting for them with their verycompanies they're charged with regulating. Especially in agencies like the SEC [USSecurities and Exchange Commission] where if you work in the enforcement divisionlong enough and you get out you can get a 2, 3 million dollar a year partnershipwith one of the big defense firms that represents these companies. So how hard areyou really going to regulate these firms? And that's, that's one of the reasons whythis collapsed. End: 00.38.26Start: 00.38.26 KF: I want to go back to in terms of the housing crisis, and youknow, sort of what happened.Ron? End: 00.38.33 Start: 00.38.33 RS: Well, you know,it's interesting. Heather and Van have studied this. And they talk about theantecedents of this. How far back it goes. Well, what you're seeing here issomething fundamental that changed. Banks used to hold the risk, that's what banksdid. And the bond between borrower and lender, I mean that goes back to Deuteronomy,there are passages there. What they figured out was that they could package and sellthe risk off - get rid of the risk, I don't need to hold the risk anymore, it freedthem. Essentially, it freed demons. That allowed enormous profits to flow,obviously, with other people's money. And - and what's interesting about this wholeperiod of regulation that Matt's talking about and what happened, these guys withthe chainsaws, good God, is that an avatar of tough love and regulation of the oldschool. When people were regulators often their whole life, even the smartest peoplein the class, theyre like, that's a noble profession. To be the official on thefield of play, one of them is a guy like Paul Volcker. Alright, now, Volcker, allsix foot eight, standing behind Barack Obama doing the campaign. There's a bigreason Barack Obama had a lot of credibility rushing through that election season.Well, Volcker gets fired by Reagan even after Volcker's tough love, choking offinterest rates, killing inflation sets the predicate for much of Reagans lovelyrevolution economically - Volcker gets fired in1987 because Reagan wants toderegulate and Volker's like that's insane this is not going to help anybody. Itsessentially going to break the fundamental bonds that allow for commerce to work inAmerica. And the last thing I'll say about this issue of framing: the lexiconmatters, own the language, if you frame a thing in a certain way you're going tooften prevail in public dialogue.Now, the key here is the framing issue. We are nota free market economy and we never have been. Look at the Jefferson quote. From thebeginning we have been a regulated free market economy, from the start. And youdon't get it to work unless there is regulation. And if Madison was here, andHamilton even, much less Jefferson, they all would say that in their powdered wigs.That's the way the argument ought to be framed. End:00.20.54KF: Jesse you looked like you wanted to get in there.Start: 00.40.57 (JL): Ron and I have talked about this a couple of times. Becausewe, attended the last accountability project event that I attended.RS: Do you have a hat or something for me that I can wear?JL: I've got to find one for ya. They don't really make these now. I'm looking forone with an American you can imagine the difficulty with that.RS: [chuckles]JL: The idea that the financial industries will regulate themselves I might be theyoungest guy on the panel, I am telling you my entire life. This has never happened.Not just that. The more they do it the worse it gets. I tell people to imagine azoo. The bars are your regulations; these are what keep certain animals from eatingalive the other animals. The idea that if we took all the bars out of the zoo andlet the animals play with each other, that it will just work out great. What reallyhappens is exactly what you would expect, a bunch of dead animals, rotting corpses,and a bunch of bloated fat cats. End: 00.41.56Start: 00.41.58 RS: I just want to give Jesse a little credit here. Because Jessehas arrived in the public stage, obviously the Occupy Wall Street and he's just akiller. Now theres a moment you can go on YouTube, you can see this, it's abeautiful moment. A lot of the problem here is that a lot of the people who havebeen rewarded, the elite - I hate that word - but people who are at the top of thepyramid, you know they don't want to be discomforted. So a great moment ofdiscomfort comes from our man Jesse, he's on the Sunday morning ABC show, ChritianeAmanpour. And they have Jesse, he's not at the table, he's on they big screen. Sothey get him on there, right after occupy kicks up, he's got the hat on the unionhat, and all that - and he's there and he starts to talk, and of course, they're,you know, theyre all ready, starting to cut the mustard with him. Oh what is thisOccupy Wall Street, what are they about? And all of a sudden, Jesse goes,You knowsomething? big face I think that I'm the only working-class guy that's ever beenon this show. And the victory is that George Will, and Peggy Noonan, and all theother swells around the table, they absolutely were speechless. That's our man, nicegoing Jesse. End: 00.43.05Start: 00.43.06 JL: Just to say something on that, cause I really laughed,ThinkProgress.org posted an article a couple of months ago stating, that in2009/2010, fifty-two percent of the people who were guests on Sunday Morning talkshows were conservatives, even though Congress was 2/3 Democrats. Then in 20 - Ithink it was - 11, 66% Sunday morning talk show guests were conservatives. If youadd Joe Lieberman, it's more than that. I want to amend my statement now. Not onlyam I the only working-class guy on those shows, I'm probably the only progressive,too. So there's that.KF: Well, theres probably alsoJL: A few other nice folks as well. End: 00.43.43Start: 00.43.44 KF: Van. Cause I want to make sure that we're talking about housingits easy to talk about you know, how the banks screwed up, how the right-wingersscrewed up, but we still have a problem and we have real people on the groundstruggling. End: 00.43.57Start- 00:43:58 VJ: Yeah I mean. Part of what you see with the video is these arethe people, you said earlieryou said earlier, Heather that we saw this coming. Youdidnt have to have fifteen Ph.Ds in advanced mathematics to see this coming. We sawit coming in Cleveland. We saw it coming in Philadelphia. We saw it coming inDetroit. But the problem was that when we said the words economic justice, peoplethought they knew who we were talking about. Those people, those brown people. Andtheres this view that you kind of know whose going to lose in this economic gain.What we are now seeing is that because we didnt pay attention to the first cracks,we didnt care about the people who were getting hurt in the first cracks the wholedam is starting to come apart. Now youre seeing, not just the traditionally poor,that we all in this room care a lot, you've now got the newly impoverished. 20million people who used to be in the middle class! And here's the sick part about it- the very pillars that we were told were the pillars that we were supposed to use,to get out of poverty, to build the middle class, those are the two pillars beingused to crush us: home ownership and a college education. You go get into debt toget a home. You see any rap star: first thing they'll say, they'll say I'm going tobuy stock ... I'm going to get my mama a house! Right? I'm going to get my mama aBIG house! Why? Why? Because in our community the stock market seems kind of seemslike the numbers game. Kind of like a hustle, some kind of gambling thing. No, no.Be responsible. Dont justget a house. So now you have the entire African-Americancommunity - middle class, now! All our wealth stacked up housing and that isdevastating. You have all these kids. How are you going to get a job? You don't wantto be working in the fast food? Go to college! Now all these kids are graduating offa cliff, with massive debt and no jobs. And the financial sector is sucking everypenny, nickel there's not a sofa cushion in America that's got a nickel under itbecause the financial sector's got everything. Now fifty states are all sendingtheir money to one zip code: Wall Street. And surprise, surprise the recovery isslow. Why? You can't go buy a sody pop let alone a sofa, a car, a house ... thewhole middle class now is drowning under this blanket of debt. And the people whoare beginning to fight back New Bottom Line, we some of the New Bottom Line peoplethe people who are, they've been fighting back for a very long time. Andthere is onesolution to this on the housing side and weve got to put his name in the publiccirculation: Ed DeMarco. Ed Demarco who was a Bush administration hold-over in theObama administration who wont let Fannie and Freddie reduce principle. It doesntmake any sense at all, if were taking it; weve had a huge hit. Let the banks sharein the pain, and we get out of this thing together. Ed DeMarco is still sitting upthere preventing this progress. If Shirley Sherrod is not going to be in theadministration, Ed DeMarco should not be in the administration. End: 00:47:18Start: 00:47:220 ES: Can I add one thing, Van is just so brilliant in the way hearticulates this. There is one other dimension to this, though, and I want to spreadthe blame around a little bit. I dont want to focus on that guy, guilty as he maybe. The problem really was when we bailed out the banks, and we wrote that blankcheck, whatever number you put on it 1.5 trillion, the numbers are hard to actuallycalculate. Nothing was asked back, in other words not only was there no regulatoryrelief in terms of Glass-Steagall and all the other arcane stuff that only the bunchof us up here could enjoy, nobody said to them back then you must write down theface-values of these mortgages right now. The moment when it could have been done,right at the moment of crisis, when the Treasury department was holding the onething the banks wanted, the money, nobody did it. Then they went back to them acouple of months later and said, Well, now lets have a separate conversation, thebanks said Forget it! It was one of the worst negotiating strategies Ive ever seen.It was one of the most fundamental misunderstandings of what was driving theeconomy then. I think the point is, the folks who were making the decisions thoughtit was just a financial issue; they still didnt get that this was a housing crisis.And that is their disconnect, they thought the whole economy was just banks andfinancial institutions; they didnt understand that what was really driving theeconomy, was both housing and the housing market collapse. End: 00:48:35KF: Well but now its all going to be ok because you can get $2000 for your home,right? We solved that problem, right?Start: 00.48.43 MT: Right, I mean, now they know that not only is there notconsequences, but they also found out officially that corruption is cheap. You know,theyre getting off for $2000 per person, thats nothing. Theres no incentive anymorefor them not to continue practicing the same kinds of frauds. End: 00.48.57Start: 00.48.59 VJ: Can I say something about this, because you know, this isfundamentally a moral question. This is a moral question. You know, people say,Well, we cant write the principle because thats moral hazard. These people werefoolish, they shouldnt have They just were greedy, they got too much house, why dothese people get they should suffer, they shouldtheyve got to learn their lesson.Well fine. Weve been learning a lesson here for a couple of years now. I have twochildren, two boys. Sometimes, they get into fights. I would be a terrible parentif I said to Kabral, You guys are fighting, youre both wrong, youre both doingthings that are terrible. Kabral, you go to time out. Mattai, heres 14 lollipops!Now, both kids are wrong, they both need to have consequences. Maybe we werefoolish to take the loans, but they were foolish to give the loans. Moral hazardhas got to be a two-way street. The problem is we had somebody in our neighborhoodwho acted like these bankers, right? Who went to Las Vegas and blew all their moneygambling, which is what these guys did, then they came back to the neighborhoodbroke, which is what these guys did, they went door to door asking everybody formoney. Help me, help me. Okay. Help me, help me, help me, asking for a bailout,which is what these guys did. And then, next week, you open the door, there theyare! Maserati, Lamborghini, yacht, a, what do you call it, a disco ball in thefront yard, scantily clad people everywhere having the party of their lives. Andyou say, Well, hold on a second, how do you guys have all this money and all thisfun? Can I borrow some flour? And they say, Get out of here, you bum! What do youthink this is, socialism? Go get a job! This is not class war. This is war againstpeople who have no class. Thats the problem, they have no class! And we got to stopat nothing. End: 00.51.03Start: 00.51.06 RS: You know its interesting, that question youre asking, Van, wereall asking, about what would happen to that table. I asked when that money waslent, I asked some bankruptcy judges from Delaware, which is kind of BankruptcyCapital: Whats happening in that transaction? Its fascinating, because this notionof other peoples money, of giving up the risk, again what people kind of think, youknow: The banks care if I cant pay. Its their money, right? Thats part of the trickof the light here. Because when you talk to people sitting at the table, theyrelike Well the guy who was lending me the money said I can afford this. They wroteup the equations and the numbers and said, No, you can afford this And actually,interestingly, its the same, often, with corporations, with the private equitypeople, very similar. And what happens is, is at that moment, this sort of an oddkind of makes-no-sense thing occurs, where the person receiving thinks that its theother persons money. That they care if I cant pay. They dont. Thats what happenswhen you give up the risk. When its other peoples money youre playing with, and whenyou create a way to never suffer the downside if things go south. If that happens,the government will be there to bail you out. Well, thats what happens when we strayaway from fundamental principles these are not Democrat or Republican, theyrefundamental principles of how markets work. End: 00.52.30Start: 00.52.33 KF: I have to wrap up soon, but I want to come back to Heather,following up on that point in the story you were telling, because I know from my ownexperience buying a condo a few years ago, they really do push. I mean they werelike You can qualify for more money, and How about this loan. So its not even Imean, this whole accountability piece, and blaming the victim, if you will, istotally disconnected from the reality that if somebody who is supposed to be anexpert tells you can qualify I dont know, okay. And unless you read all that fineprint, how would you know otherwise? What strikes me is that a lot of this is, youknow again, people being told and pushed into things they just were not ready for.End: 00.53.13Start: 00.53.14 HM: Yeah. Well, I mean we have to realize that there was willfulfraud at every step of the process. I mean, one of the big pieces that is sort of amissing story - we did a report about this with Demos back in 2005 when we talkabout these underwater homes why were the homes so inflated? Its because there wasrampant appraisal fraud. And so you have these people who are supposed to be sort ofgreen eyeshade accountants running around to houses and saying you know, This houseis only worth this much. And it started to be around, you know, the mid 2000s, thatif I was an appraiser, and I said this home in this cul-de-sac is only worth$200,000 because I looked at the math and I didnt see that it was $250,000, suddenlythe bank wasnt going to hire me to appraise the next house. And so we startedseeing on these blogs and these list serves all of these stories about thiswidespread appraisal fraud. And who was benefiting from it? It was the banks, whowanted the higher loan volume so they could sell them to, you know, the shadowderivatives market. And so, when you really follow the money and look at theincentives, every single step of the way, people are making more and more money offof the person at the very end of it having the least amount of knowledge about whattheyre actually getting into, and the least amount of true evaluation of their home,of the balloon payment, of the exploding arm, all of that. And so, the idea thatsomehow the most responsible party is the one that didnt profit, really, from itevery step of the way, is whats so galling I think, and is what is and I hope weget to talk about this more is what is making this entire issue a reallyfoundational moral tale for Americans and is animating of politics that I think Ireally cross-ideological. And you know, if we dont have a government that is on theright side of this moral tale, weve really lost legitimacy of our government. End:00.55.09Start: 00.55.11 KF: So now were going to [pause for applause] Now the actor CharlesParnell is going to read Staying Awake Through a Great Revolution by Dr. MartinLuther King, Jr. It was delivered in March of 1968 at the National Cathedral notfar from here. End: 00.55.30Start: 00.55.40 CP: We are challenged to rid our nation and the world of poverty.Like a monstrous octopus, poverty spreads its nagging, prehensile tentacles intohamlets and villages all over our world. Two-thirds of the people of the world go tobed hungry tonight. They are ill-housed, they are ill-nourished, they are shabbilyclad. Ive seen it in Latin America. Ive seen it in Africa. Ive seen this poverty inAsia. Not only do we see poverty abroad, I would remind you that in our own nation,there are about 40 million people who are poverty-stricken. I have seen them hereand there. I have seen them in the ghettos in the North, I have seen them in therural areas of the South, I have seen them in Appalachia. I have just been in theprocess of touring many areas of the country, and I must confess that in somesituations I have literally found myself crying. I was in Marks, Mississippi theother day, which is in Whitman County, the poorest county in the United States. Itell you, I saw hundreds of little black boys and black girls walking the streetswith no shoes to wear. I saw their mothers and fathers trying to carry on a littlehead start program but they had no money. The federal government hadnt funded them,but they were trying to carry on. They raised a little money here and there, tryingto get a little food to feed the children, trying to teach them a little something.And I saw mothers and fathers who said to me, not only were they unemployed, theydidnt get any kind of income. No old-age pension, no welfare check, no anything. AndI was in Newark, in Harlem, just this week, and I walked into the home of welfaremothers. I saw them in conditions, no, not with wall-to-wall carpet, butwall-to-wall rats and roaches. I stood in this apartment and this welfare mothersaid to me that night after night she had to stay awake to keep the rats and roachesfrom the children I said, how much do you pay for this apartment? She said $125. Ilooked around and thought to myself, it isnt worth $60. Poor people are forced topay more for less. And the tragedy is so often these 40 million people areinvisible. Because America is so affluent. So rich. Because our expressways carry usfrom the ghetto, we dont see the poor. And this is happening in America. The richestnation in the world. This is Americas opportunity to bridge the gap between thehaves and the have-nots. The question is whether America will do it. There isnothing new about poverty. What is new is that we now have the techniques and theresources to get rid of poverty. The real question is whether we have the will. In afew weeks, some of us are coming to Washington to see if this will is still alive inthis nation. Yes, were going to bring the poor, the tired, the huddled masses. Weregoing to bring those who have known long years of hurt and neglect. Were going tobring those who have come feel that life is a long and desolate corridor with noexit signs. Were going to bring children and adults and old people, people who havenever seen a doctor or a dentist in their lives. We are coming to demand that thegovernment address itself to the problem of poverty. We read one day, we hold thesetruths to be self-evident, that all men are created equal. That they are endowed bytheir creator with certain inalienable rights. That among these are life, liberty,and the pursuit of happiness. But if a man doesnt have a job or an income, he hasneither life, nor liberty, nor any possibility for the pursuit of happiness. Hemerely exists. End: 01.00.09Start: 01.00.15 [Film Clip: Its a Wall Street Government] End: 01.06.00Start: 01.06.07 KF: That was appropriately titled Its a Wall Street Government.So, a couple of things I want to get into there. Matt, I think Im going to startwith you since you had the choice phrase about one of the people that we saw inthere. Alan Greenspan. Oops! Thats the best he could do? Really? End: 01.06.27Start: 01.06.28 MT: Yeah. Well, you now its funny. We saw the picture of Ayn Rand inthat clip. I would actually argue that Alan Greenspan departed a little bit from herphilosophy in his time in government. I think the problem that we saw withGreenspans tenure in the Fed wasnt so much that he insisted upon a rigid separationof the government and the economy. Its that he melded the two in a way that wasvery, very destructive. What we consistently saw was that he helped create thismoral hazard. Every time Wall Street misbehaved and created bubbles, he threwgasoline in the fire by making money more available and slashing interest rates. Soit was essentially, he turned the Federal Reserve into sort of the unofficialinsurance program for Wall Street. After the collapse of the tech bubble in thebeginning of the last decade, what did Greenspan do? He didnt come in and sweep inand institute an austerity program, he slashed interest rates thirteen consecutivetimes, and he allowed Wall Street essentially to drink itself sober. It was exactlythe wrong thing to do. And then what did we see happen after this latest crisis,where we had the mega-Greenspan, Ben Bernanke, they went one step further than that.They went two steps further that. Not only did they slash interest rates, they tookthem all the way down to zero, so money is now essentially free. When that didntwork, when that didnt turbocharge the economy enough, they started printing money.They Im sorry, whats that program called again? The Quantitative Easing program,the two different quantitative easing programs. So again, theres this fusion ofgovernment and Wall Street where now, these guys have their own unofficial impliedbailout for any of their own speculative mistakes. And that is really the legacy ofAlan Greenspan. End: 01.08.24Start: 01.08.26 ES: You know, this reminds me of a story. I havent told this inpublic before. I was invited to a dinner, Alan Greenspans autobiography literallyhad just come out the day before, and there was a dinner on Park Avenue where therewere 6 or 7 CEOs from the major financial institutions, and I guess I was the skunkat the garden party. And, I was invited to join them, and Greenspan gave us a littlestory about his intellectual life. And I had actually bothered to read some of thebook, and I said to him, Mr. Greenspan, Chairman Greenspan, Im confused bysomething. How can you be a fervent advocate of Ayn Rand and the Libertarianphilosophy, and be Chairman of the Fed? The two seem fundamentally inconsistent. Ijust dont get it. And there was an uncomfortable pause, and he gave an answer thatwas frankly no more coherent to me than most of his testimonies before Congress usedto be. But I will tell you, the two, from the very beginning, never made sense. Andwe were living in a false bubble, a Potemkin village that - to come back to yourvery first question, Karen, people who really understood what was going to happen -the only question was when, not whether. End: 01.09.26KF: Jesse.JL: If I could just make one point on Ayn Rand.KF: Make a few, come on, get in there!Start: 01.09.32 JL: If I came on this panel and told these fine people that I basedmy entire political economic worldview on green eggs and ham, youd think I wasfreaking crazy. If I was like, Everything I believe is from a work of fiction fromfifty years ago, youd be like Why the hell is this guy on stage? Tell me this! Wehave facts, we have statistics, we have all these numbers that point out that wageshave been stagnant since the 1980s, debt has increased, as the cost of living hasincreased weve used easy money to fill the gap. And as wages have maintainedstagnant, we say Oh, just more credit, more credit. Where do you think this debtscome from? I laugh because the consumer has to take all this down because they cantearn a decent wage. Just look at the budget for the one percent that Paul Ryan isoffering. It makes my bills more expensive, and it makes me hard to make an income.Well what did you expect was going to happen? So just to make the point that theidea that we can have an entire financial system based off of some crazy ladysscribblings in her notebook? End: 01.10.36KF: Hey, why not? Matt, did you have something you wanted to add to that?Start: 01.10.42 MT: Just one really quick thing, just to the point of how could anAyn Rand devotee become the greatest banking regulator in the world at the end ofher life Ayn Rand was even even she was unimpressed with Alan Greenspan. One ofher last quotes with about Greenspan was, I think Alan basically is a socialclimber. So this tells you a little bit about what she thought of his intellectualseriousness. End: 01.11.06KF: Alright, so, Ron, whos accountable? Whos accountable?Start: 01.11.09 RS: Well, you know, its interesting because I think hes a socialclimber, but a political climber. Greenspans a guy who thought about the politicalcalculus every morning after he decided which side of the bed to roll out of. Andwhat youve got here is a problem that is existing now, as Jesse points out, as allof you guys point out. Basically, what weve had for decades because the US economyis not growing, its not inventing, its not building like it used to be in the globaleconomy because we didnt do the things that people talked about in the 70s investin job training, invest in infrastructure, all of those things that, frankly, JimmyCarter talked about until Reagan said its morning in America. Because of that overthree decades, what happened is that debt, risk, was underpriced in America.Fundamentally underpriced, because money became cheaper and cheaper until the pointit was free. When that happens, and it is still existing today, you, by definition,like the law of physics, have a bubble-bust economy. Theres not another way to doit. The question now is where is the next bubble inflating? And ultimately, the WallStreet model you remember Warren Buffett, and remember Peter Lynch in the 80s? Youtalk about, you know, my wife came up with something interesting in the kitchen, Imgoing to buy that stock, buy and hold. Because theres value, Ive teased out value onsome company that does something good for someone. Thats over! Now what were in is abubble-bust economy. And the bubble-bust economy is one that built an enormousdebt-trading machine. Equity, yes, its out there, the stock market. But the realmoney over thirty years was made in debt. And the bottom line business model of WallStreet that grew up incredibly profitably was basically, Short America. Ourinvestment in the great pool of capital we allocate, its all going overseas. Itsgoing to India, its going to China. America, were going to short America. Whats thebusiness model for America? Load them up with debt that ultimately will collapsethem. At which point the moral hazard will be such the government will have to pay.Thats still the business model. And the problem with the Greenspan legacy is itsbeing carried forward by Bernanke. Were living in it now. Ultimately, weve got tofigure out a way to make debt properly priced. Its hard for people because its goingto mean real suffering for real people. But until we start to move out of thiswildly abnormal situation of free money creating bubbles and busts were in it nowwere going to remain in trouble. Its the key question of do we have leadership inthis town to make the fundamental changes that would allow America to be asustainable business model and a sustainable ideal. And right now I dont see it.End: 01.13.53KF: [Points to Van Jones] Start: 01.13.55 VJ: Well you know, I tend to agree withyou, I want to say something about Ayn Rand. I learned how to say her nameapparently its Ayn and not Ann. And I can remember because its mine mine mine mine,the ideology of selfishness. But, this is an actual problem. Um, you know, there isdeceit and trickery on the economics side, but it only works because of the trickeryand deceit on the political side. And this is a very big problem, this libertarianideology. I am beginning to wonder if it is possible to be a libertarian and apatriot. I dont know if you can be. Actually, this is a very serious problem, youhave people who have taken a wrecking ball, and painted it red, white, and blue andthey are using it to smash down every American institution, every institution thatmade us great. That our parent fought for, that our grand-parents fought for, thatour great grand-parents fought for the safety net, ladders of opportunity, the civilrights, the public education. Every single American institution that made us great,they want to smash it down, they smash it down with this red, white and bluewrecking ball and they call themselves patriots. And anytime you say what aboutjustice, what about the people they say you are anti-American. America is aboutliberty, and liberty means economic liberty which meansbut hold on a second. Thelast time I checked the pledge of allegiance doesnt stop with the word liberty. Itsays liberty and justice for all. Now, the problem is this is not a pause line. Thisis a deep philosophical problem. The problem is if all you care about is liberty,economic liberty and you dont care about justice you run into problem. If you are onthe left and all you care about is justice and you care nothing about individualliberty and rights, the last century teaches you, what you get totalitarianism. Thatis the lesson of the last century. Justice without liberty gives youtotalitarianism. But we are beginning to see the lessons of this century, is that ifall you care about is economic liberty, and you care nothing about justice, youdeliver the people into a different form of domination: corporate domination.Corporate tyranny. And so the liberties of the people are actually under threat. TheTea Party is right. But it is not that the government is trying to take over theeconomy, Obama is a socialist. No. It is that the corporations are trying to takeover our government. And, the ideology that is being put forward which says it is apatriotic ideology is actually blindfolding us and actually accelerating the processby which we are being dominated. This is a very serious problem in politics. End:01.16.53Start: 01.16.54 KF: So I want to keep going on that thread. I want to ask yougovernor, former governor Spitzer, Governor Spitzer. To that point, why is nobody injail? I mean, where is the justice? Right, I mean, to the point that Van is talkingabout, where is the justice? Then I want to come back to something that Matt saidearlier because I think apart of the problem is compounded by the point, this pointabout the revolving door. That it is all the same people, you know, buddies hangingout, theyre working together theyre regulating each other. So, where is the justice?End: 01.17.27Start: 01.17.28 ES: First, I think the short answer is there has not been justice.And I think we all know that and that is why we are here in this room. I think theIcan tell you again for personal experience this goes back in 2002. We brought firstsort of the mega case against all the investment banks based on the Internet bubblestuff. The chief of enforcement of the SEC called me and said dont do it. They saiddont do it. If you get the injunction, this probably was just a civil case againstthe company saying, Stop committing fraud. He said if you do that you are going toshut down Wall Street. Now, whose side were they on? The opposition we faced fromevery federal agency, when we wanted to go through sequentially enough investmentbanks, insurance, mutual funds and all the pockets of deep-seated fraud. Theopposition we got was so deep-seated because the folks here in Washington had beensocialized into believing what Alan Greenspan was saying. And I will tell you thatit was staggering to see the vehemence with which they would stand up and say, Dontbring the case. As Harvey Pitt, you remember, was brought in as chairman of the SECby President Bush. He gave a speech to the securities agency in which he said, Wethe SEC are going to be a kinder, gentler SEC. That is a direct quote. I remember atthe time saying, This is insane, kind of like having somebody like Ayn Rand runningthe fed. A kinder, gentler SEC, notice the dissonance there is so deep seated thatwhen you try to do these things you run into huge opposition. Now. With that behindsaid I want to drop a footnote. As prosecutor we brought as many cases as we could,sometimes it is really hard. We Ron and I were talking about this before: you havewhat I call the facilitators who surround the CEO the facilitators, the lawyers, theinvestment bankers, the auditors. You know these very high priced professions arethere to create a buffer around corporate decision-making to create an air oflegitimacy. So that by the time you break through to the CEO, the CEO says Wait aminute, I have my lawyers here present me with these documents; how can I be chargedwith criminal conduct? And the very purpose of these very sophisticated industrieshas been to rationalize and justify whatever the client wants. And so the wholesystem has sort of a metastasizing cancer growing within it that makes it possiblefor people to do just this stuff and then walk away with impunity. End: 01.19.48Start: 01.19.48 KF: Which is back to the point you were making. Half the time thosesame lawyers, right, were maybe the regulators a few years earlier, were maybesomewhere else in the system. End: 01.19.57Start: 1:19:58 MT: Look at the current director of the SEC, Robert Khuzami, whatwas his job before he became the enforcer of the SEC? He was General Council ofDeustche Bank, which at the time he was General Council, he was doing the same kindof deals that Goldman Sachs got in trouble for with the Abacus deal. The same sortof renting the platform crime where they were creating bad mortgage deals to helphedge fund gamblers bet against them, and they were unloading those deals onunsuspecting clients. Robert Khuzami was involved with - he was the overseeingthose exact same kinds of transactions. And now hes the chief regulator of theenforcement division of the SEC. What kind of regulation are you really going toget when its the same people from these companies who are in charge of enforcement?End: 01.20.46Start: 1.20.47 ES: Yeah, one quick footnote I want to add. Because I think whatMatt said is so important. But also, the word we dont talk about often enough isremedies. Very often, if you think back to the Abacus case when Goldman was caughtred-handed selling ugly stuff and betting against its own product that it sold toits client the remedy in that case was pay a fine of $550 Million, which was merelythe sales tax for them on the $12.9 Billion check they got when their AIG creditdefault swaps were paid back, right? With taxpayer money. So they said, This is agood deal; well do it over and over again. What they should have done at the SEC wassay, Were going to prevent you from ever again participating in this sort ofconflict of interest. Take the business apart, change your business model. Instead,when you only impose a financial penalty, it is diminimous compared to the profitstheyre making, and then they have the federal, the taxpayer backstop. Their messageis, the message then, talking about moral hazard, is keep doing it over and over andover again. Thats why were failing. End: 01.21.39Start: 01.21.42 KF: So Ron, I want to come to you. I want to come to you, but holdon, hold on. What I want what I want you to also respond to is this point that, um,its intentionally complicated, right? I mean, the whole point is, there are trapdoors sort of written in the legislation, or in the rulemaking - but you have got tolook to find it. End: 01.21.57Start: 1:21:58 RS: Yeah, and its interesting because you know we live in a town oflawyers. This is Washington. You know, I mean God bless you all, but you know its atown of lawyers. What happens, lawyers who call themselves lobbyists? You know, onmy street up near Chevy Chase Circle, its all lobbyists. I live on the DC side, letsbe clear on that. You know you get a big American interest thats being attacked bya notion of greatest good for a greatest number governments role. Well you knowwhat happens? On my street there are new additions. There are cars in the driveway.These people who have made a choice and its a moral issue are saying My job is tocarry forward an interest. An interest that may subvert the larger interest of thegreatest good for the greatest number. And theres a moment when youre talking aboutpenalties. You know, what a penalty does, a real penalty, a take-them-down penalty,is it creates cultural change. What were dealing with here is Wall Street is insideof America. Were talking about wider cultural issues. You know, and theres afascinating moment that I reported in Confidence Men. I just stumbled into itwhere, in the late 80s, cause were talking about the passage here, the guys inCongress said, Boy, somethings changed here on Wall Street. I dont know what it is.Its about giving up risk, and other peoples money and all these things we now know.But they want an explanation. So what they did, was they put their heads together,and one of the kids it was staff run, this committee, one of these House committeeshis uncle was this fellow Seagull, one of Ivan Boeskys guys. Hey, my uncle is thatguy. Really, can we have him come down here? No, no, thats my uncle. I cant have himcome down. Whos out there? Now, three or four guys got convicted; some of you areold enough to remember that. Mike Milken, Ivan Boesky, Denis Levine was one ofthem, one of the Drexel guys, I believe. So what they did was they said, Where isLevine now? Hes in prison somewhere. So they called the Bureau of Prisons, and thegot him out of prison in New Jersey. Now, Levine cant be forced to come, he has tocome voluntarily. So they say to Levine, Look, we want you to come end edify us herein the House. There will be a closed session in a little conference room. Anythingwe can do, you know, for you as a kind of gift It was a kind of gift. Hes like,Wow! Actually, a Big Mac and a chocolate shake would be fabulous. And some fries.You know that s what I think about every day here in my prison blues. So they gothim the Big Mac. And hes sitting there eating the Big Mac, you know in the jumpsuit,and hes like Look, look, the rewards are so great by these conflicts of interestthat weve now baked into the system, that its worth taking the risk. There are onlya couple of us in jail, there are thousands of people profiting. And ultimately, thedifficulty is youve got to create a kind of explosion. A cultural change thats goingto really make sense. And they say to Levine, What would you do? He says, Well hereswhat Id do. Id get about a hundred of the nastiest prosecutors I could find. Younow, guys like Spitzer. [Laughter] Alright? Get them in a room. Id send out 300subpoenas, to all the heads of all the big investment banks, all the banks inAmerica. And the key is, do it on a sunny day. About 3 oclock. Okay? And then you goin there, and you handcuff them, and you perp-walk them all out of the office, rightout in the street, just like one of those Sicilian mob trials. You know where theyreall there. And get cameras, a lot of cameras. Because heres the key: Every guy leftbehind - and theyre all guys, frankly, mostly theyd all say the same thing at thesame moment. Oh jeez, if that happened to me, my mother would be so ashamed of me.Thats how cultural change works. It means governing is vigorous. It shows that thenotion of greatest good for the greatest number is not just playing around. Its anideal, its a principal. And were going to work with that. End: 01.26.03[Applause]Start: 01.26.09 KF: Before we close out, I want to this is for Jesse and Heatherso, kind of going back to what you were talking about, this moral issue, right? Imean, because, from a moral standpoint whats essentially happened is: actions,consequences, totally separated for the people at the top. The rest of us are leftto sort of shake it out and deal with it. So, and to Rons point, how do we movethat into action? How do we hold our democracy, our government, accountable when wedont have access to the same tools that the folks at the top do? End: 01.26.43Start: 01.26.44 HM: I think its really, we have to start with fixing our democracyfirst. We cannot continue to let the gravy train keep rolling and expect differentoutcomes when we get these historic moments like we had in 2009. I worked, I gave ayear of my life, to help pass the Dodd-Frank Act. It was a historic moment, butfrankly, the financial lobby was spending $1.5 million a day to make that law intotheir own image. And the forces of good, the public interest folks, Americans forFinancial Reform and so on had about $1.5 million for the entire fight. We simplycannot expect to have the greatest good for the greatest number if our mechanics oftranslating that is bought and sold. So the first thing we have to do is publiclyfinance our campaigns. [Applause] We have to do campaign finance reform. Because ifIm buying a product, I get to dictate what color it is, you know, I get to say Iwant to buy this shoe, right? And so I get to dictate what color it is, I get toshape it. So how can we say that the people with the most wealth should be the onesbuying our elections, and then act surprised when they are dictating the outcome,and the shape and the color of it. So thats the first thing I think we have to do.And also, you talk about rewards Ron, I think its so important. Its going to bevery difficult if it continues to be possible to make and keep billions of dollars ayear, for there to be an incentive to not cheat. Its going to be very difficult.When we have I dont believe that tax policies should be used as a punishment. Ithink taxes are the price that we pay for the great society that we live in. Theyreinvesting in our future and our people. But at the same time, were going to have touse executive compensation laws and tax laws to make the rewards a lot smaller onWall Street. Or else were never going to have the incentives we need. End: 01.28.47Start: 01.28.48 KF: So, Jesse, we have to incentivize people to not cheat. Meaning,we cant trust people to do the right thing when they have the opportunity to do so?End: 01.28.57Start: 01.28.58 JL: I would say it goes above and beyond that for me, at least onlybecause in my eyes these issues are very immediate. I have friends who are losingtheir homes. And I wont lie to you, I get really, really pissed when you try to makemy friends homeless. Thats just how I am, call me crazy. If the Supreme Court thinksthat money equals speech, I am here to tell you that poverty is laryngitis. And ifthe wealthiest 1% of Americans are millionaires, and 46% of our members of Congressare millionaires, then we dont have a voice in this country. Now, many activists whomight not be as aware of the issues, they may not be able to elocute exactly whatthe matter is. They know there is something wrong, and they want it changed. And ifthey dont find a proper avenue to change it, they will shut it down. Now at acertain point, if the machine gets so broken, maybe you should shut it down. Im notthe one to say that, Im just speaking of the concerns I hear from people within mycommunity. Or, what I call, the poor. Its a four letter word, you dont hear that toooften in DC, but sorry guys but I would say that the number one thing for me ismoney in politics. And I think the other side of that door is consequences. If Iwere to rob someone in this audience, I would go to jail. They would not go to me,Jesse, could you pay like a tenth of what you robbed from that guy and a fine andthen youll be fine? Youre too big to fail. We cant have you risk the global economy.Thats crazy, its just insane. To say that we would apply those consequences to thewealthy people, but everybody else has to share a sacrifice. You know if SheldonAdelson could flush down $10 million on Newt Gingrichs failed campaign, screw sharedsacrifice. I want to see the millionaires go first, and thats respect to thegentlemen in this room and the ladies in this room who are successful. But I wouldlove to see these guys go first. If youre in the luxury suite on the Titanic and theship starts to sink, you know what? You have to share the lifeboat, you cant justput your luggage on it and let the steerage go down with the ship. [Applause] End:01.30.59Start: 01.31.05 KF: Were going to close out this section with a reading from theactor Steven Pasquale, who is going to read a speech by Robert F. Kennedy that hedelivered in March of 1968 at the University of Kansas. End: 01.31.19Start: 01.31.21 SP: I'm glad to come here to the home of the man who publiclywrote: "If our colleges and universities do not breed men who riot, who rebel, whoattack life with all the youthful vision and vigor, then there is something wrongwith our colleges. The more riots that come out of our college campuses, the betterour world for tomorrow."And despite all the accusations against me, those words werenot written by me, they were written by that notorious seditionist, William AllenWhite. But when he lived and wrote, he was reviled as an extremist and worse. For hespoke, he spoke as he believed. He did not conceal his concern in comforting words.He did not delude his readers or himself with false hopes and with illusions.Thisspirit of honest confrontation is what America needs today. For we as a people, weas a people, are strong enough, we are brave enough to be told the truth of where westand.This country needs honesty and candor in its political life. I don't wantAmerica to make the critical choice of direction and leadership this year withoutconfronting that truth. I don't want to win support of votes by hiding the Americancondition in false hopes or illusions.I want us to find out the promise of thefuture, what we can accomplish here in the United States, what this country doesstand for and what is expected of us in the years ahead.And I also want us to knowand examine where we've gone wrong.And I want all of us, young and old, to have achance to build a better country and change the direction of the United States ofAmerica. All around us, all around us, men and women have lost confidence in eachother, it is confidence which has sustained us so much in the past. And if we seempowerless to stop this growing division between Americans, who at least confront oneanother, there are millions more living in the hidden places, whose names and facesare completely unknown. I don't think that's acceptable in the United States ofAmerica and I think we need a change. If we believe that we, as Americans, are boundtogether by a common concern for each other, then an urgent national priority isupon us. And this is one of the great tasks of leadership for us, as individuals andcitizens this year. But even if we act to erase material poverty, there is anothergreater task. It is to confront the poverty of satisfaction - purpose and dignity -that afflicts us all. Too much and for too long, we seemed to have surrenderedpersonal excellence and community values in the mere accumulation of materialthings. Our Gross National Product, now, is over $800 billion dollars a year. Yetthe gross national product does not allow for the health of our children, thequality of their education or the joy in their play. It does not include the beautyof our poetry or the strength of our marriages, the intelligence of our publicdebate or the integrity of our public officials. It measures neither our wit nor ourcourage, neither our wisdom nor our learning, neither our compassion nor ourdevotion to our country. It measures everything in short, except that which makeslife worthwhile. And it can tell us everything about America except why we are proudthat we are Americans. If you believe that the United States can do better. If youbelieve that we should change our course of action. If you believe that the UnitedStates stands for something here internally as well as elsewhere around the globe, Iask for your help and your assistance. I want the next generation of Americans tolook back upon this period and say as they said of Plato: "Joy was in those days,but to live." Thank you very much. End: 01.35.33Start: 01.35.35 [Film clip: Conflict of Interest] End: 01.41.25Start: 01.41.32 KF: So in the context of our conversation, and just having watchedthat, what were talking about in terms of our democracy and the future of ourdemocracy if you consider it a democracy, still or corporatocracy; how do we thepeople - Van, Im going to start with you how do we get a return on our investment?End: 01.41.50Start: 1:41:52 VJ: Well, I mean, first of all, I think we have to recognize that -its been said many times, and its as true today as it was a hundred years ago theway to deal with organized money, the power of organized money, is the power oforganized people. And we just cant get away from that, we keep well maybe theressome app we can get, or theres just got to be some way to do it cheap and easy. Andwe kind of went from hopey to mopey real fast. Because people thought they weregoing to go vote for Obama and they were going to work really hard. They had to gocheck that box Whoo, that was hard. And then, they were going to open the curtainwhen they came out, and there was going to be five rainbows everywhere, and thepolar bears walking around thanking you for stopping global warming, and everythingwas going to be just done, with that one vote. And we tried to win in one day.Democracy is tough work, you got to win every day. And we have not set ourselves upto do that. I wanted to say Im a member of an activist organization and we aredoing some stuff. And Id like to just take a few minutes ad tell you the stuff weredoing. I hope Jesse will do the same thing. Were not just laying down. Theres goingto be this 99% Spring, maybe you should talk more about it than I can. But there arelots of organizations inspired by Occupy, including Rebuild the Dream, MoveOn.org,SCIU, New Bottom Line, Domestic Workers Alliance, that are, as we speak, gettingready to get back in the streets and to say Listen, we are not going to put up withthis. And what you saw is for all the power and all the money and all the bribes andall the lies, and the power that a TV station named after a sneaky furry mammal, orwhatever that TV station is..JL: Ferret.VJ: Ferret? What is that?JL: Fox.VJ: Fox! Fox. For all the power of that, some young people with some sleeping bagsgot out here and changed the whole national conversation, and broke the drive towardausterity with the power of their voice and the power of their example. The 30million American people who voted for Obama, most of those people are here in theUnited States, I dont think they left. We have the ability to turn the tide. The twothings were focused on: Were going after Wall Street, were going from anger now toanswers. Wall Street has its straw in the pockets of every American with theseunderwater mortgages and these student loans. Those were the two ways out ofpoverty. Theyve now become the two ways into poverty. And its wrong. And so atRebuild the dream, were going after Ed DeMarco I know hes not the only bad actor,but we dont think anybody in the Obama administration should be holding the Americandream under water. Holding homeowners underwater and not letting Fannie and Freddiereduce the principal on mortgages. We think thats wrong, and we are going after it.Were also going after the idea that July 1st of this year were going to doubleDOUBLE the interest rate on student loans for American students. Were going to gofrom 3.4 to 6.8% on our poorest students, sucking $20 billion out of the pockets ofeight million of our most vulnerable students. That is wrong. And so if we cantsecure the American dream by creating jobs and putting money in peoples pockets, wecan at least save part of the American dream by stopping people from robbing us andtaking money out of our pockets. Weve got a moral obligation to do that. Were goingto do that no matter who wins in November. We have a moral obligation to do that.End: 01.45.21KF: Jesse, you want to talk about the Spring?Start: 01.45.23 JL: The funny thing for me, and the thing that gladdens me in alarge way, is that the politicians and many of the pundits will say Im the expert,come to me. Come here, this is where all of the answers will be found. And thenpeople take it to the streets and say, Well how will you fix it? Wait a minute, didI just take that job? Did I get elected for that? Am I here to fix the worldeconomy? I would say that its gotten to the point where theres such a disconnect inleadership for many reasons, that, you know what, people have to come up with theanswers now. And the great thing about the Spring coming forward, is that in a sadway people have gotten desperate. There are no answers. There are bills stacked upto the roof. And, you know, when people say, Whats Occupy Wall Streets message? Imlike, You know all those things you keep blaming the President for? Yeah, were kindof upset about some of that stuff too. Not the crazy Socialism, wheres his birthcertificate nonsense, but you know, the real things. The great thing is, we havethis wonderful system our founding fathers left us with, and its called one man, onevote. Or one woman, one vote. Or one person, one vote. And I tell people, you onlyget once every two years to use that vote. The time in between you can actually dothings! Its not to just wait like, Oh, they gave me my five minutes of democracy forthe two years and now I dont have any more democracy. Get out there and dosomething. Talk to your neighbors. You know, I wrote at DailyKos.com, my friendsused to ask me before Occupy kicked in: Why do you care so much about this? Why areyou obsessed with politics? What do you think youre going to do by talking aboutthis? I tell people, Well, in order to fix these problems we have to identify them,and then we have to find like-minded people to work with work together for thiscombination of issues. I never get that question from my friends anymore. Theyveseen what getting out there and speaking to people, and putting your neck on theline for what you believe in theyve seen what that inspires, and I can only imploreevery kindhearted patriot who cares about their neighbors and their family and theirfriends, who really believes that they are their brothers keeper, get out there andfight, man, because this is about the future, and were not getting a second chance.End: 01.47.21Start: 01.47.22 KF: So it strikes me that essentially what been happening-if youlook at, I mean yes we had a record turn out in 2008, but I think part of the issuehere is a smaller and smaller number of people are participating in the system,meaning a smaller and smaller number group of people are deciding whats happening tothe rest of us. So at the same time we know the cooperate interest its huge amountof money. And it feels sometimes I think for a lot of us hopeless. When we aredealing with that kind of money and Im going to ask you about that- and I also wantto put to the panel: do we have the right infrastructure at this point cause Ithink there is a lot of a thing going on - but do we have the right infrastructureat this point with the organizations that we have to really deal with the challengeswe are faced with. End: 01.48.10Start: 01.48.11 ES: Karen I want to give you a thought that maybe is an affirmativethought against this back drop of incipient doom, and Citizens United, and money andeverything washing over the system. There is an answer to it, and the answer istechnology. And, I dont mean to beyou know, paint an imagery of a Panacea thatsomehow renders the Coke brothers money somehow irrelevant or Sean Idols who wasable to do with Gingrich and some of the primaries. Of course that is a hugelyproblematic moment or problem in our politics. But, the capacity to communicate viathe internet, the social media, we have seen across the world what it can be interms of an organizing mechanism that renders the bought TV ads that much lesspotent. And so I think the answer look, Heather - I wish we had public financing ofcampaigns. It is certainly the right answer philosophically, ethically in is so manydifferent levels. We are not going to get there anytime soon given the politicalrealities. But where we will get I think is where the next generation and maybe I onthe wrong side of this curve. But I thing those who are under 40 and, you know, alittle bit beyond that are going to use new technologies to get their politicalinformation. Not only is it going to be Jon Stewart and Steve Colbert as opposed tostandard network television, it is going to be Facebook and all the other stuff outthere. So I think thats good. One other point I want to come back to; this comesback to something that I think Ron articulated close to an hour, hour and a halfago: the fundamental divide is the misunderstanding of how the economy really worksvs. the mythology that has been created by the imagery of President Ronald Regan.The Marlborough man riding on a horse who individually created the railroads and allthe computers. We have also had an economy depended on not only regulation butgovernment help to people who create. And if we dont get back to that understandingwe are not going to be able to ride the ship. Finish: 01.50.07Start: 01.50.07 KF: So how do we change I mean, I agree with you, but at the sametime that is not the message we are bombarded with. So, how, Matt, do we bettercommunicate that thats really how the economy is suppose to be? End: 01.50.20Start: 01.50.22 MT: I just want to step back for a moment and make another pointwhich is there is an area where we are not looking for solution where could lookthat is actually Wall Street itself. I mean in the last 3 or 4 years I have spent alot of time talking to people on Wall Street. There are a lot of good people on WallStreet and a lot of these people do not want to make a living selling over-pricedphony mortgages to the state pension fund in Mississippi. They are against thisrapid financialzation of the economy, where they are making money, essentiallygambling through transactions and fees. They want to invest in America. They want toinvest in good companies and they want to compete, legitimately against each other.But theyre being help back because of this continual ability of thesetoo-big-to-fail companies to depend on government support. So all the leaders ofthese corrupt companies that are bent on making money through short cuts and fraudand all these other things that are counterproductive, they are able now to competenot in the area of banking and customer service but through political influence.And that is depriving us of an obvious solution to all of our problems which is weare losing the ingenuity of all these people on Wall Street who are really are a lotof very smart people and very creative, because the best people are not allowed tocompete with each other. And I think if we were to simple step back and stop givingthese banks billions and billions of dollars of free money whenever they get intotrouble and we stop giving them bailouts. We will have this flowering of solutionsthere as well and I think that is just and over-looked area for potentialrenaissance. End: 01.52.06KF: Heather?Start: 01.52.06 HM: I actually think that we should be a little more optimistic, Iam a little more optimistic than Mr. Spitzer.KF: Thats good, youre the youth.HM: Oh right, exactly, is that my job? About and because of reasons a lot like whatMatt is saying, I think that the fault lines, the people who are actually disgustedwith the status quo - it isnt just former regulators and liberal activists andjournalists, it actually is a lot of people who feel that they are really losingsomething of a shared American project and I think what is missing is leadership.If you look at the numbers on whose supports really dramatic campaign financereforms that even democracy experts, like the people that I work with say that isactually a little bit too far, that would not be constitutional even if in ourversion of the constitution, thing like total bans on private money - that isextremely popular with people. I mean so I think this is a place where, theprofessional advocates are actually a little behind where people are across theideological spectrum. And Im a little pessimistic about this Facebook idea, becauseit is true that sort of the personal media is not going to be created by theconsultant firm, today. But we know that Facebook is a free product because we arethe product and our information is the product. And so there is no reason why theads of tomorrow wont just look like wall post from me to Jesse, right. Theres noreason why just because the technology seems flat that there wont be a lot moresophisticated ways to push this information. And it usual is negative information,but to get to each of these bubbles in our Facebook community, Im just Im not asoptimistic about the sort of flowering of social networks to sort of get rid of thecampaign machines. End: 01.54.01Start: KF: I want to pick up on your optimisms, so that we can move towards andoptimism end. You know, I like to think about the model of the civil rights movementwhere you had a broad landscape of different organizations kind of who each hadtheir own lane, right? You would have had the Occupy Wall Street-ers, you would havehad the legal strategy, there is the social strategy. So, Van, Im going to came backto you on this question. Do we have that infrastructure that we need in a time likethis to essentially try to take up that movement? And, I think that the otherchallenge that we have, I think that you are exactly right: people thought that byFebruary first of 2009 its all done, were post-racial, its all good, everybodyshappy. But people forget how much time it can take to make these things happen. Thesecond piece, though: we cant let it take too much time. End: 01.54.54Start: 01.54.55 VJ: Right. Well, I mean, Im glad that youve mentioned the civilrights struggle and I think that certainly what happened with Trayvon gives a senseof how long these kind of changes can take. And I think you are going to see asobering - not just economically - but now we have this young man who was killed. Myview about this is pretty straight forward. This 99% idea - you know there isOccupy, and thats kind of a smaller number of people - the Occupiers and they go outand you know they get out there and get pepper sprayed and stuff and Im like, Thatsgood. Im not signing up for that program, but I get it. Its not good that you getpeppered sprayed, but theres that part of it. But youve also, I think, opened a doorfor a lot of people who support the idea and who believe in what the stand that wastaken last fall is going to be taken again. And the polling said that thats about athird of Americans, about 100 million people. Theres 100 million people who prettymuch agree with everything here. Thats a lot of people, thats a lot more people thanat the start of the civil right movement. So the question is to Heathers point: Whatis the right combination of kind of high-tech and high-touch approaches? Causetheres no app. There is no Facebook that is going to be a part. Again, I am apart ofan organization, Rebuild the Dream; we are trying to solve some of these problems.Here is what I think is the fundamental thing we ran up against. When we got intothe Washington DC 2009 moment we thought, and we were wrong, but we thought that ifyou had the white house, if you had Nancy Pelosi running the house, the best speakerever, Nancy Pelosi, and if you had 60 votes in the Senate you had enough to govern.And we were wrong. Thats only one third of what you need, thats one third. The othertwo-thirds: youve got to have media - they got their furry mammal TV station, goodfor them. But weve got to have media. And youve got to have a movement in thestreets. What we saw was the Tea Party march while we sat down and munch popcorn andcomplained about Obama. And they moved the tight rope. Obama the president is atight rope walker; like any president you can only lean so far to the left or theright. The tea party moved the whole tight rope. Occupy has begun the process ofmoving it back. Now, I am one of the people who was a grassroots outsider, so I knowa little bit about protest politics. And then I became a White House insider forabout six months - best six months of my life, followed by the worst two weeks. Butit gave me a perspective, and its a much more optimistic perspective. I saw how thepeople in the White House side did not understand the social movement, and I saw howthe people on the social movement side did not understand the White House. Thats oneof the reasons why I wrote this book, not to promote it, but to promote it, Rebuildthe Dream. I tried to take an honest sober assessment, what did we do wrong on theinside, what did we do wrong on the outside, so we can do better going forward. Ihave a lot of optimism. This is a great country. I get the chance to go all over theplace and I get the chance to give speeches. People who show up at my speeches areprogressives and Tea Party people. The Tea Party people come to protest. But, Jesse,Heather, and everybody else will tell you within five minutes we are on the samepage. There is a massive constituency out here for reform. This country is a muchbetter country than it looks like on television. And I am confident that if we takethat long view of the civil rights movement, but with that urgency that was broughtforward with that generation we can get it done. End: 01.58.36KF: Jesse do you want to pipe in?Start: 01.58.40 JL: First of all, well said brother. You know I come off a littleangry sometimes. Hey, thats how I respond when my friends are getting under fire bythe bad guys. At the same time, I remain tremendously optimistic because history hasproven that America goes through these cycles, and that every 30 or so years weexpand more rights. We seek a more perfect union. And, I think we are at a cross nowagain. We had the Regan revolution. Regan was a crappy president and he is dead. Iknow that is going to some hurts peoples feelings, but it is true. And we are comingback around other way. They pushed so far; the pendulum is swinging back now. Andthey are in total panic mode. America is going to be a little browner, its going tobe a little sexier, we are going to like some different music, we might have somegay friends. I am cool with this. The people who cant handle that, Im not worriedabout hurting their feelings. Im not. Im just speaking on my own behalf here. I havefriends in Occupy who says you know we need to work with the Tea Party guys, we needto reach out; I agree with that spirit. But there is this guy name Barack Obama andI think he tried that, Im not sure if its working. Maybe if we could just have aconversation with our sane friends, I think we can do this, just saying. 23% ofAmerica though Bush did a heck of job at the end of his presidency. I think theother 77% are governing majority. Andmore to the point Im tremendously optimisticfor two reasons. 1) We cant screw it up, its the whole future. When Ron and I spokemonths ago and you said to me, Theyre trying repeal the 20th century, Ive told everysingle person Ive met that one, it just nails it. Look at the war on women, look atthe war on civil rights. They are trying to repeal our right to vote, for god sakes.Its Jim Crow 2.0, and you know what? I dont want anybody in this country livingunder that. We did it last century, not enough. And in some parts of the countrythat resonates. Guess what the union hats are for; I am going to drag this outkicking and screaming into 1866 and Im going to work on the 21st century after that.So smile, drink, eat, be merry; youre young, it doesnt last forever and it could beworse, your heart could end up in Dick Cheneys chest. End: 02.01.02[Applause]KF: If the twitter verse was not already buzzing that sure are now. Ron?Start: 02.01.13 Ron: Yeah, heres my plate of my life that says, try to be morehopeful. You know, the thing that I think is hopeful is that this is really at itscore not a political issue. Ive got friends who are Republicans, many of my bestsources are Republicans. Paul ONeil, Elliot Richardson that community I mean, theywould be liberal Democrats right now. You know, and that fact is even folks on theRepublican right - late at night when they confess sins say, You know, we need sometough love here, we need government to work. You know whats interesting here whenyou hear everybody talk is that everybody up on this stage has sort of stepped intothe breech a bit in their life. They say, Im going to sort of trust truth and maybeget myself into a little bit of trouble, but the fact is that we cant really sourceout the democracy and part of the hopeful thing that I think weve all seen in thepast, well, certainly, few years, is that - as you talk about, Van, President Obama- but President Johnson says to martin Luther king, just like Franklyn Rooseveltsaid to various people, Make me do it. Make me do it. Moral energy tends to bubbleup from the bottom in America it just does. Its part of the miracle this wholesystem where the people are actually in charge of this whole circus. And whatsinteresting is that you see how the occupy Wall Street crowd kind of puts some steelin Obamas spine. They made do it. Thats just a process now thats unfolding; when apolitical system doesnt work people take to the streets. Thats our model, and itshappening now. I mean, when I look out at all of you out here, you know I think of aguy who, you know, most people dont know: this guy Theodore Parker. Now, you getblank looks. He was a 19th century abolitionist. A white guy who was mostly like a19th century blogger. Just kind of a trouble maker. He was a preacher, he had apulpit. He got up there, he wrote his things, some of them got published. Well in1850 he is out there doing his thing just like some of the people in the panel andsome of you. He was involved in his times involved public events. He writes thatthis is a democracy of the people by the people for the people, 1850. There islawyer from Illinois, not too sure about his future, big gangly guy who hears that.Decade plus later, he is dedicating a cemetery in Pennsylvania and there is it of,by, and for the people. This Parker guy, again just like a lot of people I know onWashington, like a lot of people I think all of us know. Said, Look I am a citizen.I just want to be involved in the times which I live. I believe in this stuff. Hewrote another phase. Thank god someone wrote it down: that the ark of the moraluniverse is long but it bends towards justice. He added a couple wards but that wasbasically it. Well this phases impresses the young preach a hundred years later forAtlanta. And of course Martin Luther King says the arc of the moral universe is longand it bends towards justice. He says it all through the early 60s. He says it in1965. As people prepared to cross the bridge in Selma walking into billy clubs andthe country changed. We all push each other forward. And the fact is is that - thisperson most people dont knowwell, that phase about the arc of the moral universe isstitched in the rug of the oval office. One of Barack Obamas favorite Phases,something that speaks to him, speaks to the possibility, like it speaks to all ofus. Who we might become. But its interesting because as we talk about that arc andhow does it bend. Couple years ago I was driving though Cleveland Park, again an arctown. And I heard that, for the first time, I heard King says it in a geranial typeon NPR, and Im just sensing a few NPR listeners out here. And Im in the car and weredriving and my wife and I and the kids were in the back and we hear this. He says itin a church on his tape. And people hadnt heard it at that point. Its the early 60s.You know and its interesting because he is talking first about the idea that weshall overcome will be the anthem of the movement. The movement were talking abouthere. The great social movement of the 20th century. And even in this backwateredchurch there is confusion because, you know, he says to them in a kind of speech; inthe old churches its always I shall overcome, a statement of personal testimony, butsays it should be we, because we will need each other in what were about to face andwhats up ahead. Cause we will be reviled. We will be spat upon, we will be hated,and some of us, he says, will have to suffer physical death so others will not knowthe psychological death of ignorance, of racism, of biggotry. Then you hear in thechurch everyone got quiet as though their champion dropped his sword. And King picksit up. No, no, be not deterred. The arc of the moral universe is long and it bendtowards justice. And as we are hearing this in the car we start bawling. And ofcourse the kids are terrified. Dads crying! Whats wrong? My wifes like, This isprogress, this progress, this is good, this is good. But I thought about that formonths later as it rocked around in my head. And I think Barack Obama might agree,after the very difficult lessons that man has learned in the last few years. Thatthe arc does not bend on its own, it bends because people of shared purpose grab itand pull with all of their might. Jesse and his group they created change. Imagineif 1000 lawyers from Washington marched on the capital. What would that look like?Everyday. Everyday. Well, that would be different. The arc bends because people pullwith all their might and its nights like this that are apart of it, and its what youdo when you go home, its what you tell you kids. This night makes me feel is a kindof strength and I wish everyone here strength to grab that arc and to pull witheverything you got. God bless you End: 02.08.50